CFTC Proposes To Restore CPO And CTA Registration Relief For SEC-Registered Private Fund Advisers

Key Takeaways:

• New CPO Registration Exemption: The proposed Rule 4.13(a)(4) would allow SEC-registered investment advisers to avoid CPO registration when operating privately offered commodity pools with QEP and certain accredited investor participants, with no limit on commodity interest trading levels.
• Restored CTA Registration Relief: The proposal would amend Rule 4.14(a)(8) to restore CTA registration relief for advisers providing commodity trading advice to CPOs relying on the new exemption, provided the advice is incidental to their securities or other investment advice.
• Increased Small Pool Exemption Threshold: The gross capital contribution threshold under the Small Pool Exemption would increase from $400,000 to $800,000.

On August 18, 2026, the Commodity Futures Trading Commission (CFTC) approved a notice of proposed rulemaking that would amend Part 4 of its regulations to create a new exemption from commodity pool operator (CPO) registration for certain Securities and Exchange Commission (SEC)-registered investment advisers (RIAs) operating privately offered commodity pools whose participants are limited to specified sophisticated investors (the “Proposed Rule”). The Proposed Rule would also restore related commodity trading advisor (CTA) registration relief and increase the threshold for the small-pool exemption from $400,000 to $800,000. Comments on the Proposed Rule are due by October 5, 2026.

The Proposed Rule is most relevant to SEC-registered private fund advisers that have been unable to rely on the de minimis exemption set forth in CFTC Rule 4.13(a)(3), whether because their funds’ commodity interest exposure exceeds the applicable trading thresholds or because their investment approach is otherwise incompatible with the  conditions of Rule 4.13(a)(3). A significant feature of the proposed exemption is that it would impose no limit on the level of commodity interest trading a pool may conduct without triggering CPO registration, giving qualifying managers broader flexibility to pursue commodity-focused strategies.

Background

Part 4 of the CFTC’s regulations governs CPOs and CTAs. The Commodity Exchange Act generally requires a person who meets the definition of a CPO or CTA to register with the CFTC unless an exemption is available.

The Proposed Rule would, in effect, restore a version of former CFTC Rule 4.13(a)(4), often referred to as the original QEP exemption. Before its rescission in 2012, the original QEP exemption allowed operators of privately offered commodity pools to avoid CPO registration if participation in the pool was limited to certain financially sophisticated investors, including qualified eligible persons (QEPs), and certain other conditions were satisfied.

In December 2025, the CFTC’s Market Participants Division issued Staff Letter 25-50 to provide interim no-action relief from registration as a CPO for certain SEC-registered private fund managers. Letter 25-50 generally applies where the CPO is an SEC-registered investment adviser, the pool interests are privately offered in the United States and exempt from registration under the Securities Act of 1933 (the Securities Act), general solicitation is used only where permitted under Rule 506(c), pool participants qualify as QEPs, and the adviser files Form PF with respect to the pool.

The Proposed Rule would replace this interim no-action framework with a formal rule, and the CFTC preliminarily intends that a final rule would supersede Letter 25-50.

Proposed Rule 4.13(a)(4)

The centerpiece of the Proposed Rule is a new CPO registration exemption for RIAs operating commodity pools that satisfy specified conditions. The CFTC refers to those qualifying pools as “Eligible Pools” and to the exemption as the proposed RIA-QEP exemption (the “Proposed Exemption”). The CFTC states that the Proposed Exemption is intended to reduce duplicative regulation for RIAs already subject to SEC oversight while preserving market oversight and investor protection, consistent with the CFTC’s stated regulatory approach of applying the “minimum effective dose” of regulation. The exemption may be claimed on a pool-by-pool basis, allowing an adviser to rely on other exemptions (such as Rule 4.13(a)(3)) or remain registered as a CPO with respect to other pools.

To rely on the Proposed Exemption, the following conditions would need to be met:

• The CPO is an RIA.
• Interests in an Eligible Pool would need to be exempt from registration under the Securities Act. Eligible Pools generally could not be marketed to the public in the United States, except that pools offered under Rule 506(c) of Regulation D could be marketed to the public.
• Pool participants (each, an “Eligible Participant”) would be limited to: (1) natural persons who meet one of the QEP categories listed in Rule 4.7(a)(6)(i) (including qualified purchasers and knowledgeable employees), which do not require satisfaction of the separate portfolio requirement; and (2) non-natural-person participants who are either QEPs or accredited investors under Rule 501(a)(1)-(3), (a)(7), or (a)(8) of Regulation D.

The CFTC views SEC registration as central to the exemption because RIAs are already subject to conduct standards under the Investment Advisers Act of 1940, SEC examinations, disclosure obligations, SEC reporting requirements, and, where applicable, Form PF reporting.

As noted above, the Proposed Exemption also limits participation in an Eligible Pool in a manner that more closely tracks the former QEP exemption than Letter 25-50. Notably, the Proposed Exemption distinguishes between natural-person and non-natural-person participants. This is a key difference from Letter 25-50 and, notably, means that natural persons whose QEP status rests entirely on meeting the portfolio requirement as an accredited investor would fall outside the Proposed Exemption’s Eligible Participant standard. The Proposed Exemption would also only be available to an RIA-CPO that files Form PF for the relevant Eligible Pool because the adviser is otherwise required to file it under applicable securities regulations. This differs from Letter 25-50, which requires Form PF for every pool for which the adviser claims relief. The distinction may become particularly significant if the pending joint SEC-CFTC proposal to raise Form PF filing thresholds is adopted, as some advisers falling below the new thresholds would be unable to comply with Letter 25-50’s Form PF condition but would be able to rely on the Proposed Exemption.

The CFTC is seeking comment on whether the Form PF condition is sufficient to permit the CFTC and the Financial Stability Oversight Council to monitor market and systemic risk, given that some exempt pools may not be subject to Form PF or CPO-PQR reporting requirements.

Continuing Conditions and Transition Issues

If the Proposed Exemption is adopted as proposed, an RIA-CPO relying on the exemption would need to file a notice through the electronic exemption system maintained by the National Futures Association (NFA) and would remain subject to Rule 4.13 requirements, including representations regarding statutory disqualifications, annual affirmations, notice updates, recordkeeping and inspection requirements, and responding to special calls from the CFTC.

The Proposed Rule would also extend the transition framework in Rule 4.13(e)(2) to Rule 4.13(a)(4) pools. Under that framework, when a registered CPO transitions a pool to exempt status, existing participants must be offered a right to redeem. However, the CFTC preliminarily intends that CPOs already relying on Letter 25-50 would generally not be subject to this redemption requirement when transitioning those pools to the new exemption, and is seeking comment on whether a later effective date for this provision would be appropriate.

Related CTA Registration Relief

The Proposed Rule would amend Rule 4.14(a)(8) to restore related CTA registration relief. Current Rule 4.14(a)(8) allows certain investment advisers to claim CTA registration relief when their commodity interest trading advice is directed solely to specified categories of permitted clients, including CPOs that have claimed an exemption under Rule 4.13(a)(3). The Proposed Rule would add CPOs relying on Rule 4.13(a)(4) to that list of permitted advisory clients. The CFTC states that this amendment would restore the integrated operation of Rules 4.13 and 4.14 that existed before the 2012 rescission of the original QEP exemption.

The proposed relief would remain subject to Rule 4.14(a)(8)’s existing conditions. The adviser’s commodity interest trading advice must be solely incidental to its securities or other investment advice, and the adviser must not otherwise hold itself out as a CTA. A person claiming relief under Rule 4.14(a)(8) must also file an electronic notice with the NFA, affirm the notice annually, amend it to correct inaccurate or incomplete information, and maintain relevant books and records.

Small Pool Exemption

The Proposed Rule would also increase the threshold for gross capital contributions under Rule 4.13(a)(2), commonly known as the Small Pool Exemption. Current Rule 4.13(a)(2) exempts a person from CPO registration if none of the pools operated by that person has more than 15 participants and the total gross capital contributions received for units of participation in all pools the person operates or intends to operate do not exceed $400,000. The Proposed Rule would increase the dollar threshold from $400,000 to $800,000. It would not change the 15-participant limit or the exclusions for certain contributions made by a pool’s CPO, CTA, principals, or certain related persons. The CFTC describes the proposed increase as an inflation adjustment. If adopted, the amendment could allow more small-pool operators to avoid CPO registration if they satisfy the 15-participant limit and other Rule 4.13 requirements.

Looking Ahead

If adopted, the Proposed Rule would provide a more durable basis for CPO and related CTA registration relief than the current no-action relief under Letter 25-50. The Proposed Rule would not simply codify Letter 25-50, however, because it would use participant eligibility standards drawn from the original QEP exemption, require Form PF only if otherwise required, and integrate the exemption into the Rule 4.13 notice, annual affirmation, recordkeeping, and transition framework.

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